CIMAREX ENERGY $58.40 (New York symbol XEC; TSINetwork Rating: Extra Risk) (303-295-3995; www.cimarex.com; Shares outstanding: 85.7 million; Market cap: $5.0 billion; Dividend yield: 0.8%) produces and explores for oil and natural gas. Gas makes up 53% of its output.
Cimarex’s properties are in the Mid-Continent region of the U.S., which includes Oklahoma, Kansas and Texas; the Permian Basin of western Texas and southeastern New Mexico; and the Texas Gulf Coast.
In the three months ended March 31, 2012, Cimarex’s production averaged 603.5 million cubic feet of natural gas equivalent per day (including oil). That’s up 2.5%, from 590 million cubic feet a year earlier.
Even so, Cimarex’s cash flow per share fell slightly, to $3.54 from $3.56, due to lower gas prices.
Cimarex trades at 4.1 times its forecast 2012 cash flow of $14.16 a share, based on the latest quarter. The company’s long-term debt of $572 million is a low 11.4% of its market cap.
To increase its production, Cimarex will spend as much as $1.6 billion on exploration and development this year. However, it will focus on natural gas liquids (such as ethane, propane and butane) and crude oil, both of which are now much more profitable than gas.
Cimarex is a buy.
